As the Trump rally continues and stock prices remain elevated, shopping for value stocks may not sound feasible, writes Validea CEO John Reese in this week’s Forbes. He points out, however, that whether or not the market is overbought “shouldn’t matter to a true value investor.”

Reese discusses the strategy of value investing legend John Neff, who led the Windsor Fund from 1964 to 1995 and outperformed the market by an average of 3.1% per year. He outlines Neff’s approach and explains the metrics used and the rationale behind them, highlighting the fact that Validea’s Neff-inspired portfolio has outperformed the S&P 500 for nine of the past twelve years.

Using his Neff-based strategy, Reese offers the following stock picks:

• Carters’ (CRI) is a marketer of apparel for babies and young children in the U.S. and Canada that scores well based on historical sales and earnings-per-share growth, as well as the relationship between its price-earnings ratio and EPS growth (known as the PEG ratio).
• LGI Homes (LGIH) is engaged is the design, construction, marketing and sale of new homes in the U.S. The Neff-based stock screen likes the company’s price-earnings ratio, which is nearly half that of the broader market, as well as its favorable PEG ratio.
• McKesson (MCK), a provider of pharmaceuticals, medical supplies and health care information technology, earns high marks for its favorable EPS growth and earnings yield.
• Principal Financial Group (PFG) is an investment management company that offers a range of financial products and services. Its total return compares favorably to the stock’s price-earnings ratio (and is more than double that of the broader market) and the screen likes the stock’s relative strength and EPS growth.

On Validea, we’ve developed portfolios based on the investment strategies of history’s most successful stock pickers, including Peter Lynch, Warren Buffett, Benjamin Graham, Martin Zweig, Ken Fisher and Joel Greenblatt. The John Neff portfolio has been one of the best over the last 12 months. See more here. To access the entire Validea research suite, sign up here for a risk-free trial.